UPDATE 1-Dutch fund PFZW to divest from high carbon companies

Reuters Staff

(Updates with details on investments; background)

By Toby Sterling

AMSTERDAM Nov 17 (Reuters) - PFZW, a Dutch pension fund
with 161 billion euros ($172 bln) of assets under management,
said on Tuesday it will sell down investments in companies with
relatively high carbon dioxide emissions.

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PFZW is the latest high-profile investor to cut exposure to
fossil fuel-linked investments this year.

Citing the need to invest in a way that protects the
environment, the fund said it would divest completely from
coal-related companies by 2020, while investments in fossil fuel
companies will be reduced by 30 percent.

"This will take place in four annual steps and result in
investments being withdrawn from approximately 250 companies"
focused in the energy, utilities and materials sectors, the fund
said in a statement.

Maurice Wilbrink, a spokesperson for PGGM, which manages
assets for PFZW, said the divestments represent about 5 percent
of PFZW's equity portfolio, or 1.7 billion euros.

"That will be taken from companies in those sectors that
score poorly" on measures of efficient resource use, and be
reinvested in companies that score well, Wilbrink said.

He said PGGM and PFZW believe the investment change will be
"neutral to slightly positive" for medium-term investment
returns.

That comes despite the risk that the decision to divest may
be poorly timed, given the fall in oil prices over the past
year. The fund did not provide data but said in its
third-quarter report that commodity-linked investments had
"delivered the worst returns" in its investment portfolio, which
had a loss of 3.2 percent from the same quarter a year earlier.

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Explaining why companies that score well on sustainability
measures might turn out to be better investments, Wilbrink gave
the example of them suffering less if carbon becomes more
expensive due to carbon taxes or as utilities' carbon allotments
under 'cap and trade' systems are reduced.

PFZW, which represents healthcare workers, said it would
increase investments in healthcare, real estate and companies
that guarantee the supply of food and water.

California passed a bill in September requiring the state's
two largest pension funds to divest from coal.
Norway's sovereign wealth fund, the world's largest, said in
February it would divest from thermal coal companies.

ABP, the largest Dutch pension fund, said in October it
would exit all investments that don't meet "sustainability"
criteria by 2020.
($1 = 0.9379 euros)
(Reporting by Toby Sterling; Editing by David Clarke and Susan
Fenton)